Nissan Sees Electric Car Envy in Critics of the Leaf

Skeptics have been harsh in their appraisal of Nissan’s grand plans for electric cars — which the automaker will begin putting into practice with its all-electric Leaf compact, introduced in Japan on Friday. Critics scoff at everything from the car’s limited driving range to what they consider its inflated price tag.

But Carlos Ghosn, chief executive at Nissan and its sister automaker, Renault, dismisses the scoffing as his rivals’ lack of imagination — and their envy.

“They don’t have one, so it’s not a surprise,” Mr. Ghosn said in an interview here this week at Nissan headquarters. “People who are challenged by innovation are going to fight it in the beginning,” he said.

Mr. Ghosn, whose stint running two global automakers has been so admired that the Obama administration courted him unsuccessfully last year to overhaul General Motors, is staking his reputation on what he calls the world’s first mass-produced electric car.

The Leaf, a hatchback that the Environmental Protection agency says has a range of 73 miles on a fully charged battery, will start selling later this month for $33,600, including destination charges, in selected markets in the United States. It went on sale in Japan for about $45,120, and will be introduced to European markets next year.

The Leaf is part of a bigger mission by Mr. Ghosn to redefine a brand that has been something of a laggard in green technology, a field long dominated by Toyota and its pioneering Prius gasoline-electric hybrid.

Initial inventories of the Leaf will be modest. The automaker has the capacity to make 50,000 units in the first year, 20,000 of which will be allocated to the United States. Nissan has been taking reservations since earlier this year and says it already has filled its American quota.

Photo

Nissan workers in October cheered the start of production of the all-electric Leaf, which was introduced in Japan on Friday.Credit
Chang-Ran Kim/Reuters

Where Mr. Ghosn and the skeptics diverge is in forecasts for coming years, not only for the Leaf but for electric vehicles generally.

Mr. Ghosn said Nissan expected to sell at least one million units of the Leaf in its first six years — considered a model’s standard life cycle — and recoup the company’s investment within that period. In comparison, it took the Toyota Prius more than a decade from its 1997 debut to hit the one million-unit sales mark.

“We’re not selling 5,000 or 10,000 cars,” Mr. Ghosn said. “We’re talking about a massive option in the market.”

Mr. Ghosn — who splits his time between Yokohama and the Paris offices of Renault, which owns 44 percent of Nissan — sees the Leaf as setting off a wider shift toward electric cars. Together with Renault, Nissan has spent nearly $5.3 billion since 1992 to develop the Leaf and seven other all-electric models in a joint zero-emissions project.

By 2020, Mr. Ghosn said, electric cars will account for a tenth of global auto sales.

Most industry forecasts have been far more conservative. J. D. Power, the market research company, predicts that in 2020 only 1.3 million of a projected 70.9 million cars that will be sold worldwide will be electric, fewer than 2 percent. Even the most optimistic analysts put the figure at no more than 5 percent.

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The doubts about electric cars include concerns about their relatively low horsepower, the reliability of a new technology and the prospect of the batteries losing their charge on the road. The sticker-price premium of an electric car over a gasoline one will also dissuade consumers, critics say, especially now that gasoline prices have steadied.

Buyers of electric cars, the pessimists predict, will be limited to a demographic niche: high-income, environmentally conscious and early adopters of technology. “It will be difficult to convince large numbers of consumers to switch from conventionally powered passenger vehicles,” J. D. Power said in a report in October.

Mr. Ghosn has spent months trying to counter those concerns, one by one. He said the Leaf’s traveling range between charges would meet the needs of most motorists. Volume production will bring down costs, Mr. Ghosn said, while tax credits, which Nissan says come to $7,500 in the United States, will offset some of the Leaf’s price premium.

And while Mr. Ghosn acknowledged that the Leaf would not appeal to everyone, he said there was a viable target audience. “The guy who is today driving a large pickup truck, doing a hundred miles a day — if he doesn’t come buy our electric cars, it’s not a problem,” Mr. Ghosn said. “Whom we are addressing first are environmentally conscious people who drive relatively moderate distances and really want something that’s completely independent of oil.”

Those target consumers, he said, make up more than 10 percent of the market.

Mr. Ghosn’s confidence is rooted partly in Nissan’s strong rebound from a slump during the global economic crisis. In its most recent quarter, Nissan’s net profit increased fourfold from a year earlier, prompting the automaker to raise its full-year net profit forecast to $3.2 billion, almost twice the previous estimate. It is Nissan’s second turnaround under Mr. Ghosn, a Lebanese-Brazilian Frenchman who took the helm in 1999 and brought the automaker back from the brink of bankruptcy.

Mr. Ghosn cites moves by his rivals to step up their electric vehicle development as evidence that his is the right strategy. While Toyota is careful to play down the prospects of the electric car in favor of its prized hybrid technology, it has slowly broadened its electric vehicle plans, saying last month that it would expand the 2012 rollout of the electric version of its ultracompact, the iQ.

But perhaps the biggest battle is the one about to begin between the Leaf and the Volt plug-in hybrid from General Motors. The Volt went on sale this month, for $41,000 before government subsidies.

Mr. Ghosn said the Volt was not a direct competitor because it would carry a gasoline engine to kick in after 50 miles on batteries.

The biggest constraint on Leaf sales, Mr. Ghosn said, will be how many electric cars Nissan’s factories can make. Over the next two years, the company, which now makes the Leaf only in Japan, plans to open assembly and battery factories in Europe, North America and Asia that will give it the capacity to make 500,000 electric vehicles a year.

But Nissan also appears to be hedging its bets. In November, it officially introduced the Infiniti M hybrid, its first mass-produced hybrid model besides the hybrid Altima sedan, which uses Toyota’s technology. Analysts have warned that developing multiple powertrains could weigh on Nissan’s finances.

“There’s demand for other types of cars — it’s not simply either-or,” he said. “But people who buy electric cars,” he said, leaning forward in his chair, “they will never ever buy another type of car again.”

A version of this article appears in print on December 3, 2010, on Page B3 of the New York edition with the headline: In Critics of the Leaf, Nissan’s Chief Sees Rivals Just Being Envious. Order Reprints|Today's Paper|Subscribe